What Are the Two Types of Costs Associated with Inventory

question 190

Multiple Choice

What are the two types of costs associated with inventory?

• A) Holding costs and selling costs
• B) Stock-out costs and holding costs
• C) Shipping and handling costs and holding costs
• D) Overstock costs and stock-out costs
• E) Holding costs and tracking costs

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Definitions:

Expected Return

The weighted average of all possible returns for an investment, where each outcome is weighted by its likelihood of occurrence.

Standard Deviation

A measure of the dispersion or variability of a set of data points from their mean; used in finance to gauge the volatility of an investment.

Market Risk Premium

The market risk premium is the additional return an investor expects to receive from holding a risky market portfolio instead of risk-free assets.

Portfolio AB

A diversified collection of investments of varying types held by an individual or institution.